Gold bullion coins are one of the easiest ways to buy gold. You can buy in a variety of sizes depending on the coin so your entry price can actually be quite low. There are, however, some things you need to watch for and understand when you are purchasing gold bullion coins. You can easily get a raw deal unless you know what you are doing and work with a reputable dealer.
Here are 4 tips to help you be a savvy buyer and get your gold bullion coins for a good price.
Tip 1: Smaller coins will have a greater markup. The simple fact is that it costs more to produce 20 coins that are 1/20th of a troy ounce than it costs to produce one coin that is a full troy ounce.
Tip 2: Know the current troy ounce price of gold. For a full troy ounce you should pay no more than 5 to 20% over the spot price of gold. If you are paying a 60% markup, you are getting ripped off.
Tip 3: Understand purity levels. Gold is a very soft metal and gold bullion coins that are also legal tender or currency have base metals added to make them more durable so they can withstand the handling that is typical for currency. You should still get the full amount of gold in the coin. For example, the American Gold Eagle is 22 carat because it has alloys added to make it more durable. The coin weighs more than an ounce to account for the weight of the base metals. This means you are still getting the full amount of gold in the coin. If you are buying 24 carat gold understand that it is soft and protect the coins.
Tip 4: Decide what you want and buy what you want. If you are investing in gold bullion coins for the gold and not the collector value buy what you want. There are some less than reputable dealers who will try to pressure you into buying collector coins when that is not what you want. Stick with your investment plan and buy the type of gold bullion you want.